Trading volume has increased steadily on the back of the growing mid-to-long term hedging demands of institutions, amid the continued weakness of the US dollar throughout the world since 2004. Of particular note, open interests have almost doubled since 2003.
If the current trend continues, the annual volume is forecast to reach 3 million contracts. As of August 12, 2005, a total of 1.68 million contracts have been matched, representing 80% of the annual volume of 2.09 million contracts recorded in 2004.
Recently, the number of days taken before the trading volume reaches one million contracts has been decreasing due to active trading. It breached the 10 million mark only 84 days after the volume reached 9 million contracts, 4 times faster than the 341 days recorded in the early days of trading.
USD futures have become firmly established as an effective tool for exchange rate risk management, and have achieved solid growth as an increasing number of institutions opt to use the contract for mid-to-long term hedging purposes.
Institutional investors such as banks and investment trust companies are dominating the market, accounting for more than 75% of the total trading volume, while individual shares in the market are gradually falling.
